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AI's RAM Demand Could Sink Samsung's Phone Profits
24 Apr
Summary
- AI's increasing demand for memory is driving up DRAM and NAND prices.
- Samsung MX division faces potential first-ever net loss on smartphones.
- Component costs have already led to price hikes for budget and premium phones.
Samsung's mobile division may face its first-ever net loss on smartphones in 2026, a stark warning issued by mobile experience head TM Roh. This potential crisis stems from the skyrocketing costs of DRAM and NAND memory, essential components now heavily influenced by the burgeoning AI sector. The immense memory requirements of AI hardware, such as Nvidia's Vera CPU, consume vast amounts of LPDDR5x RAM, significantly impacting the cost of consumer devices.
Memory and storage now represent a substantial portion of smartphone manufacturing costs, doubling their previous impact. Budget phones, like Motorola's Moto G, have already seen price increases of up to 50 percent. Samsung has also introduced a $50 hike on its mid-range Galaxy A37 and A57 models and increased prices on premium devices like the Z Flip 7 and Z Fold 7.
While Samsung's semiconductor division is experiencing record profits, the mobile division's future profitability is uncertain. Industry projections suggest that even with accelerated production expansions by companies like Samsung, Micron, and SK Hynix, DRAM production could fall significantly short of demand in 2027. This persistent supply-demand imbalance, driven by AI's insatiable appetite for memory, is unlikely to ease soon, further pressuring smartphone prices and Samsung's bottom line.
